NEW YORK Noranda Aluminum Holding Corp. reported a slide in net income during the first three months of the year but remains bullish on the aluminum sector, despite volatile price movements on the London Metal Exchange.
The Franklin, Tenn.-based aluminum producer posted net income of $16.2 million in the first quarter, down nearly 34 percent from $24.4 million in the fourth quarter and off almost 58 percent from $38.3 million recorded in the same quarter last year. Sales rose 4 percent vs. the fourth quarter to $353.5 million but dropped 10 percent from the first quarter of 2011, which the company attributed to the declining price of aluminum on the LME.
"Persisting global macro-economic concerns, particularily the European sovereign-debt crisis and fears of slowing economic growth in China, have dampened LME aluminum prices since the second half of 2011," the company said in its earnings statement.
Three-month aluminum on the LME closed at $2,080.5 per tonne Wednesday, down 2 percent from an April high of $2,125 per tonne and well below prices near $2,800 a tonne reported at this time last year.
But while the company expects there will be more volatility ahead, Noranda president and chief executive officer Layle K. (Kip) Smith said he is confident that demand for the companys aluminum products will remain solid.
"Its very difficult to forecast where the Midwest premium and LME prices will go. (But) we strongly believe one of the reasons were so bullish on aluminum in the medium and long-term ... is due to fundamental demand. Demand for aluminum continues to be solid, and we believe that will continue," Smith said on an earnings call Wednesday.
The company shipped 93.4 million pounds of flat-rolled products to third parties in the first quarter, up 2.3 percent from 91.3 million pounds in the same quarter last year, while primary aluminum shipments dropped nearly 6.5 percent to 121.5 million pounds from 129.9 million pounds in the year-ago period.
The company is still pushing forward with the expansion at its New Madrid, Mo., smelter, Smith said Wednesday. Although the company previously said the expansion, which will involve replacing rectifiers and expanding production by 35 million pounds per year, would come online in 2013 (AMM, Feb. 16), Smith said this week it will begin production sometime in 2013 with ramp-up completed by 2014.